Thread by @shivsakhuja

Here's a degen #DeFi play (high risk):

1. Buy $5k $FTM and $5k $TSHARE

2. Deposit both to the FTM-TSHARE LP on @tombfinance

3. Deposit the LP tokens to @beefyfinance. You will receive beefy's moo LP tokens.

🧵👇 [1/x]

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4. Deposit the moo LP tokens to fantom.market.xyz. You are earning 836% APY on this (224% APR)

5. Flip the switch to mark the beefy LP tokens as collateral on @market_xyz

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6. Borrow $3k $MAI at 12% APR. You will get liquidated if your LTV > 50% (if the value of your LP tokens falls by 40%).

7. Put the borrowed $3k into the @Defrost_Finance curve stablecoin pool earning 120% APR (230% APY)

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Without borrowing from @market_xyz, you will earn:
= $83,600 (836% APY)

With borrowing, you will earn:
• + $83,600 (from @beefyfinance)
• + $6,900 (from @Defrost_Finance)
• - 382.50 (interest on borrowing $MAI from @market_xyz)
compounding.

= $90,117.50 (901.17% APY)

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Congrats on squeezing out an extra 65%.

Now since these insane rates don't last forever, I often find it better to look at APR since that is a more conservative measure of actual runrate.

Unlike APY, APR doesn't assume that it will be able to benefit from compounding.

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Here are the results for APR (without compounding).

WIthout borrowing:
= $22,400 (224% APR on the FTM-TSHARE LP)

With borrowing:
+ $22,400
+ $3,600 (from @Defrost_Finance)
- $360 (interest on borrowing $MAI)

= $25,640 (256.40%)

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This is the power of borrowing against interest bearing collateral.

Even without compounding, you're squeezing out an extra 32.4%.

Since @Defrost_Finance is a stablecoin pool, you can always withdraw, and repay the loan on @market_xyz at any time to protect from liquidation

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Risks with this strategy:

• Rates don't last forever. This strategy likely only works for a few weeks or months before you have to rotate elsewhere.

• $TSHARE itself is high risk. If you want lower risk, you can deposit $TOMB - $FTM LP tokens instead.

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• Flash crash can liquidate you before you have time to withdraw and repay the loan. In this case, you would also incur a liquidation fee of 10%.

• @Defrost_Finance is also a very new, high-risk stablecoin pool. Rates won't last forever, stablecoin could fail, etc

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• @tombfinance peg could fail entirely, driving $TSHARE price to 0.

I've outlined this risk before in a thread:

https://twitter.com/shivsakhuja/status/1484361529713573893?s=20&t=xTGih825mGpii-l4g7baPg

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I'm very conservative with leverage. Never been liquidated, and I plan to keep it that way.

To mitigate liquidation risk:

• Borrow at lower LTV (15% is significantly safer than 30%). Don't let greed liquidate you.

• Deposit borrowed funds to a safer LP.

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• Use a liquidation calculator to understand the risks.

• Borrow against a safer LP (with lower volatility). $FTM - $TSHARE is a very high-risk LP.

Stay safe - happy #farming!